78

UNIT 7 - CROSS - BORDER BANKING SERVICES

7.1. OBJECTIVES OF THE CHAPTER:
We have discussed in the preceding Units 2 to 6 the fund-based and non-fund based services of
commercial banks within a domestic economy without reference to external sector involving crossborder banking. In this Unit we shall exclusively discuss the main kinds of cross-border banking
services to acquaint you with:
the main external sources of fund-raising: debt, equity, investment, Non-resident accounts and
the main features of each source;
the main policy provisions connected with import financing and their main methods; and
The main export financing methods at pre-shipment and post-shipment stages and the regulatory
requirements in brief.
7.2. INTRODUCTION:
7.2.1. Cross-border or international banking has assumed greater importance in several countries as the
world is fast becoming a global village with increasing international trade/ investment/ financing. The
World Trade Organization (WTO), of which about 150 countries including India are members, is aiding
in the global trade expansion by removing the restrictive trade practices. In India, the external sector has
been opened up wider since 1991 and its contribution to the countrys Gross National Product has been
increasing thereafter. The recently announced Foreign Trade Policy of India (2004-09) aims at
increasing the growth of the country foreign trade much faster than in the past years (vide Economic
Times dated 1.9.2004, page5). It seeks:
to double the countrys global merchandise trade from 0.7% at present to 1.5% by 2009 and
To increase the countrys exports from US$ 61.90 billion in 2003-04 to US$ 195 billion by 2009,
involving compounded annual growth rate of 33% assuming the global annual growth rate of
10%.
7.2.2. The growth in the countrys external sector would entail expanded and diversified baskets of
exports and imports, greater cross border financing and investment by foreign corporations in India and
also by Indian corporations in overseas markets. The countrys foreign exchange reserves have already
crossed US$ 120 billion mark and would grow faster in future. These trends of growth in Indias
external sector highlight the importance of cross-border banking.
7.2.3. In this Unit, we shall first describe the main sources of raising foreign funds for supplementing the
domestic funds for investment in India. It would be followed by the import financing methods and
export financing of various kinds in Rupees as well as in foreign currency. These topics would present
an overview of the main facets of cross-border banking relevant for India. Due to the constraint of space,
the topics would be dealt with in brief and cover the salient aspects only.
7.2.4. Cross-border financing involves typical risks foreign exchange risk, country risk- due to
conversion of the national currency (i.e. Indian Rupee) in foreign currencies at rates which fluctuate
from time to time and the risk of non-repatriation/ non-payment by the country of import of Indian
goods /services. These risks are not involved in domestic financing. Of course, the credit risk of non-

79
payment by the obligor/ borrower involved in domestic financing also applies to cross-border financing.
The banks and the businesses which deal in international finance and trade have to take careful steps to
mitigate and manage the foreign exchange and country risks; in addition to credit risk which is enhanced
as the obligor is a non-resident outside the geographic and legal boundaries of India.
7.3. CROSS - BORDER FUND RAISING SOURCES:
The main rationale of mobilizing external funds in India mainly is as follows:
The domestic savings rate and volume are inadequate to meet the investment needs of the
economy, involving a large investment in infrastructure projects, like roads, seaports, airports,
power.
The countrys merchandise imports exceed its merchandise exports.
The cost of domestic funds is much higher than the cost of external funds.
External funds are raised broadly by four methods/ sources which are briefly described below.
7.3.1. External Commercial Borrowings (ECBs):
ECBs refer to the convertible foreign currency loans raised from international financial markets. The
ECB policy lay down by Ministry of Finance; Government of India prescribes the quantum, maturity
and use of foreign currency funds and gives priority to infrastructure development. RBI has been
delegated the responsibility of clearing corporate and institutional proposals for raising ECBs up to the
specified limits. ECBs include the following:
i)

Commercial bank loans through syndication of international banks.

ii)

Floating Rate Notes (FRNs): Interest is quoted as certain basis points above LIBOR (London
Inter-Bank Offered Rate) and changes with LIBOR. The spread depends on the borrower
risk. Notes are for short periods.

iii)

Fixed Rate Bonds: These are for medium term and the interest depends on the maturity
period and credit standing of the party.

iv)

Suppliers Credit and Buyers Credit (discussed later in this Unit).

v)

Commercial borrowings from multi-lateral institutions like International Finance Corporation

(IFC), Asian Development Bank (ADB)

7.3.2. Raising of Equity through GDRs/ ADRs/ IDRs:

Indian companies can raise equity in international markets by following the mechanism / procedures
prescribed by the regulatory authorities of the country where the securities would be listed (foreign
country). The shares denominated in foreign currency are issued to foreign subscribers and are traded in
the stock exchanges of the foreign country. The shares are held by the depositories and their proceeds

80
are repatriated in India. By issuing the shares in foreign markets, the visibility and standing of the issuer
gets enhanced among international investors.
Global Depository Receipts (GDRs) are issued in Euro market and are very popular among foreign
investors.
American Depository Receipts (ADRs) are denominated in USD and traded on NASDAQ (National
association of Security Dealers Automated Quotation System) and NYSE (New York Stock Exchange).
International Depository Receipts (IDRs) are traded in Europe and are also called European Depository
Receipts.
7.3.3. FCNR/ NRE Accounts:
Non-resident deposits are mobilized from the persons of Indian nationality, or Indian origin living
abroad (NRIs) and Oversea Corporate Bodies (OCBs) predominantly owned by such persons. There are
clusters of NRIs in Middle East, USA, Canada, and South East Asia.
a) Non-resident Indians (NRIs): These fall in two categories:
These are Indian citizens who stay abroad for employment or business or vocation
outside India or for any other purpose in the circumstances indicating an intention to stay
abroad or an uncertain period. Income Tax Act has prescribed minimum residence period
abroad in a year or block of years for determining income tax liability of such persons in
India.
Persons of Indian Origin (PIOs): These are persons of Indian origin (other than Pakistan
or Bangla Desh) who had held Indian Passport at any time, or whose parents or grand
parents was a citizen of India, or the person is an spouse of an Indian citizen.
b) Overseas Corporate Bodies (OCBs): These refer to a company, partnership firm, society or other
corporate body owned directly or indirectly to the extent of at least 60% by NRIs.
NRIs can maintain the following types of accounts with banks in India, which are designated as
Authorized Dealers (ADs) by RBI. NRIs accounts are exempt from income tax, wealth tax, gift tax.
Loans against the security of these deposits can also be granted by banks in India.

Foreign Currency Non-Resident (FCNR) accounts: These are maintained in British Pound,
USD, DM, Japanese Yen, Euro or other currencies as may be designated by RBI from time to
time. The account can be opened only as a Term deposit for a maximum period of 3 years,
subject to renewal if desired by the depositor. Interest rates are linked to the international rates of
interest of the respective currencies, as determined and notified to Authorized Dealers (ADs)
from time to time.

Non-Resident External (NRE) accounts : The NRIs may remit money in any permitted foreign
currency and the remittance is converted in Rupees for credit to NRE accounts. The accounts can
be in form of current, savings, fixed deposit, recurring deposits. Interest rates and other terms of
these accounts are as per RBI directives. These are higher than the rates on comparable domestic

81
deposits during periods when RBI wants to encourage the inflow of funds in NR(E) accounts.
The interest rates on these accounts are lowered when their inflow is to be discouraged by RBI.
7.3.4. Direct Foreign Investment:
FDI is an important route for mobilizing foreign funds by way of equity participation in Indian
enterprises to the extent permitted by the countrys regulations. FDI brings foreign capital plus foreign
technology and managerial skills. Further, with the retention of a part of profits, FDI helps in capital
formation in the host country. In these ways, FDI is a better funding source as compared to ECB, which
involves debt servicing by the country entailing foreign exchange outflow over a period of time.
Since 1991, Government of India has been encouraging FDI in several sectors, particularly high
technology and infrastructure sectors, by raising the investment limits and relaxing the procedural
hurdles. FDI in India is approved through two routes:
Automatic Approval route: RBI accords automatic approval within 2 weeks if the parameters of
the Foreign Investment Policy are met.
Foreign Investment Promotion Board (FIPB) route: It considers cases not covered by the first
route and decision is taken within 4-6 weeks, based on a liberal approach.
7.4. IMPORT FINANCING:
7.4.1. Import Trade Policy:
Indias Trade Policy has been liberalized significantly since 1991. The present trade policy seeks to
make the countrys economy stronger and competitive with increasing integration with the global
economy. The main objectives of the Import Trade Policy are:

To accelerate the countrys transition to a globally oriented vibrant economy with a view to
deriving maximum benefits from expanding global market opportunities.
To stimulate sustained economic growth by providing access to essential raw materials,
intermediates , components,, consumables and capital goods required for augmenting
production.
To enhance the technological strength and efficiency of Indian agriculture, industry and services,
thereby improving their competitive strength, while generating new employment opportunities,
and to encourage the attainment of internationally accepted standards of quality.

Certain provisions of the countrys Trade Policy, relevant for bank finance, may be briefly described as
follows:
i)

Every importer/ exporter has to have an Importer-Exporter Code (IEC) number as a prerequisite for import or export trade.

ii)

The goods listed under the Negative list are prohibited for import/ export and goods under
Restrictive list can be imported/ exported on a restricted basis only as prescribed or
permitted by the appropriate trade authorities.

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iii)

Imports of goods under Open General Licence (OGL) is permitted without any licence. For
other goods, Import licence is issued by an authorized officer of the Central government in
terms of the EXIM (Export Import ) Policy.

7.4.2. Regulatory Requirements:

Banks play an important role in financing imports of industrial raw materials, capital goods (machinery
and equipments) and consumer goods etc. in the country. While financing imports, banks follow the
various regulatory requirements. An outline of these is given below:
i)

Trade Control requirements: These have been mentioned in the previous paragraph.

ii)

Exchange Control requirements: These relate to opening of Import LCs, methods of payment
and their time frames. Exchange Control regulations of RBI (AD circulars) and Foreign
Exchange Management Act (FEMA) provisions are required to be complied by the traders
and bankers. Failure in compliance is strictly viewed by RBI and may lead to adverse
consequences.

iii)

Uniform Customs and Practices for Documentary Credit (UCPDC) prescribes guidelines for
LCs issuance , negotiation, confirmation etc. which are to be followed by banks dealing in
international trade financing.

iv)

Foreign Exchange Dealers Association of India (FEDAI), the apex forum of banks authorized
to deal in foreign exchange in India, has prescribed guidelines and fees etc. for various kinds
of forex transactions, in consultation with RBI. These are followed by all Authorised
Dealers.

7.4.3. Methods of Financing Imports:

Imports of capital/ consumer goods can be financed through one of the following methods. Each funding
option has its own merits/ demerits and the importer has to carefully choose which option suits him best
in the given circumstances, depending on the nature and value of the goods to be imported, the payment
terms, the country of export, market financing practices and facilities available, etc. The main features
of the financing methods are briefly discussed in the following paragraphs.
i)

Import Letter of Credit: The main features and kinds of LC as a non-fund based credit
facility has already been discussed in Units 3 and 6 respectively. LCs are used in domestic as
well as international trade. While opening Import LCs, the banker has to ensure compliance
with all the regulatory requirements mentioned in paragraph 7.4.2., which is not necessary
for opening LCs for domestic trade. There is another difference between import LC and
domestic trade LC. In Import LCs, apart from Opening bank, Advising bank, Negotiating
bank, there are usually two other types of banks as follows, which are not always involved in
domestic LCs:

Re-imbursing bank, which honours the settlement of the negotiation/ payment/ acceptance
lodged by the Negotiating bank, and

83

Confirming bank, that adds its guarantee to the LC opened by another bank by undertaking
responsibility to pay/ negotiate/accept the documents under the LC, in addition to the prime
responsibility of the Issuing bank. A confirmed LC thus provides two guarantor banks for
payment of one bill of exchange covered by the LC.

We have already described the features of Revocable and Irrevocable LC, Fixed and Revolving LC in
Unit 6. The other kinds of LCs are described below:

Confirmed Irrevocable LC: Only irrevocable LC can be confirmed by another bank. Hence a
Confirmed Irrevocable LC is guaranteed by two banks- the Opening bank and the Confirming
bank. It thus provides to the exporter a better assurance of payment of the bill of exchange on the
due date. Hence, for export to unknown parties for the first time, exporters stipulate for opening
confirmed irrevocable LC and also without recourse to the drawer.

Transferable Credit: It permits transfer by the original beneficiary in favour of second (one or
more) beneficiary. It enables the original beneficiary, who is a middleman or merchant exporter,
to earn his commission by substituting his invoices for the invoices of the manufacturers (actual
suppliers).

Back-to-back Credit or Countervailing Credit: It is a credit opened with the backing or

security of another credit. The original credit that is offered as security for opening a Back-toback Credit is called the Principal Credit. The purpose of opening a Back-to-back Credit is that it
enables the beneficiary, who is not the actual supplier, to open another Credit in his favour as
security and to obtain reimbursement by presenting the documents received under Back-to-back
Credit. The reasons for opening Back-to-back Credit are: (a) the beneficiary is not willing to
disclose the true source of supply to the opener , and (b) the actual supplier insists on payment
against documents for the goods, but the beneficiary of the Credit is short of funds. Bankers
exercise caution while opening a Back-to-back Credit, by opening it only in favour of sound
supplier and on behalf of a reliable client.

Red Clause Credit: This is a form of Anticipatory Credit, which allows a part of the credit to be
made to the beneficiary by way of an advance at pre-shipment stage in anticipation of actual
shipment; the advance along with interest is adjusted from the proceeds of the export bills in due
course. The Red Clause (printed in red) Credit provides for payment of an advance to the
beneficiary (exporter) by the negotiating bank for purchase of raw materials and meeting
processing/ packaging expenses in regard to the export order. The advance is adjusted from the
export bills proceeds along with interest.

Green Clause Credit: It is an extended version of Red clause Credit. It provides advance not
only for the purposes of Red Clause (i.e. raw materials purchase, processing/ packing charges)
but also for warehousing and insurance charges at port when the goods are stored, pending
shipping space or availability of ship. The advance is granted against warehouse warrants as
security and only after the goods are kept in bonded warehouses.

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Stand-by Letter of Credit: Such Credits are in vogue in USA, but not in India. They are used as
substitutes of Performance guarantees or for securing loans. They are opened by banks in
countries where they are precluded by law from issuing guarantees.

ii)

Suppliers Credit: This is another method of financing capital goods by banks. The exporter
raises a loan from his banker under the export credit scheme in force in his country and
extends a credit to the importer. The payment terms are normally 15-20% down payment and
the balance payable in 10 equated half yearly installments. The interest charged is linked to
the extant export credit rate as decided by the Organisation for Economic Cooperation and
Development (OECD). The bills or promissory notes issued by the importer for deferred
payment credit are normally guaranteed by the importers bank.

iii)

Forfaiting: For import of capital goods on medium term credit, without recourse to the
exporter, against the guarantee or aval of the importers bank. Please refer to Unit 5 for
details.

iv)

Import Leasing: Ships, aircrafts, oil drilling rigs etc. are often acquired through
international leasing for taking advantage of cheaper international financing cost and also tax
shields available in more than one country (double dip tax advantage). The leasing method
is preferred to the asset owning method also because of the risk of obsolescence of the
costly and high technology driven assets. For details, please refer to Unit 5.

v)

Counter-trade: This method is resorted to by some countries facing balance of payments

difficulties. Under this method, imports are paid for in the form of goods (exported by the
importing country), rather than in convertible international currency. This is a form of
bilateral trade between two countries where the payment settlement is in the form of goods/
services only. Such trade was earlier prevalent between India and erstwhile USSR/ Eastern
European countries.

7.5. EXPORT FINANCING:

7.5.1. Export Trade Policy and regulatory requirements :
Export trade policy is a part of the countrys export-import policy, briefly described in paragraph 7.4.1.
The exporter, like importer, has to have IEC number and export is banned and restricted as the relative
lists in the Trade Policy. Export of goods not covered by these two lists can be effected freely. In terms
of the recently announced Trade policy (2004-09), as mentioned in paragraph 7.2.1., Indias exports are
expected to increase by over 100% and its contribution to the world exports are expected to increase
from 0.70% to 1.50% during the next 5 years. These projections augur well for export finance as the
opportunities for its growth will be wider and faster than in the previous years.
Like Import finance, the regulatory requirements for export finance are also governed by the Trade
Control and Exchange Control regulations, RBI directives on export credit, UCPDC and FEDAI
guidelines, vide paragraph 7.4.2.

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7.5.2. Pre-shipment Finance:
Pre-shipment credit is a working capital (short-term not exceeding 360 days) finance extended to
registered exporters at the pre-shipment stage, in anticipation of his exporting
the goods to a foreign country. Pre-shipment finance is inter-linked with the post-shipment finance (vide
next section 7.5.2) as the latter liquidates the former. The salient aspects of pre-shipment finance, as
briefly described below, are governed by RBI regulations, including concessionary finance, which
should be strictly followed by banks. This is in contrast to domestic finance where bank is free to charge
interest rate as per the credit rating of the borrower/ facility and the bank can also dilute its internal
norms with proper internal approval, without any reference to RBI.
i)

Elements of Packing Credit: It refers to any advance/ loan provided by a bank to an

exporter for financing the purchase/ processing/ manufacturing or packing goods prior to
shipment, on the basis of LC opened in his favour, or in favour of some other person, by an
overseas buyer, or a confirmed and irrevocable order for export of goods or any other
evidence of an order for export from abroad.

ii)

Eligibility Criteria:

iii)

The exporter must have IEC number allotted by the Director general of Foreign Trade
(DGFT).

The exporter should not figure in the exporters caution lists of RBI and Export Credit
Guarantee Corporation (ECGC).

Existence of a firm export order or LC in the name of the exporter, or merchant

exporter/ export house (indirect exporter) to whom the borrower manufacturer would be
supplying goods for export under the export order LC.

Liquidation and Period of Finance:

The period of packing credit should be decided by the bank having regard to specific factors
in each case, such as production cycle, shipment schedule, but not exceeding 360 days. Any
advance in excess of 360 days will not qualify for the concessionary interest rate for export
finance and the domestic credit rate would be charged on such advance ab initio.
Each packing credit advance must be adjusted by the proceeds of the relative export bills
purchased/ discounted/ negotiated/ Rupee advance allowed.
Where packing credit can not be adjusted due to the exporters failure to ship the goods, the
advance can be adjusted by transferring funds from his domestic cash credit/ overdraft etc.
account and interest applicable to the domestic credit be charged from the date of
disbursement of the packing credit until adjustment.

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7.5.3. Post-shipment Finance:
i)

Main elements:

ii)

Post-shipment finance is granted to exporters after shipment of the goods. It is granted

from the date of shipment of the goods till the realization of the export proceeds.
Its period is within 180 days (for cash exports of consumer goods) and more than 180
days for capital goods export on deferred term basis. The rate of interest. The period of
180 days includes Normal Transit period (as prescribed by FEDAI for various regions)
and grace period, if any.
Interest on post-shipment finance is charged strictly as per RBI directives issued from
time to time. If a demand bill is not paid before the expiry of the Normal Transit Period,
or a usance bill is not paid on the due date, it is treated as overdue bill and interest is
charged at higher rates as prescribed for such bills.
The post shipment finance should be utilized to liquidate the packing credit advance.

Kinds of Post - shipment Finance:

Export bills purchased/ discounted/ negotiated.

Advances against export bills sent on collection.
Advances against export bills sent on consignment basis: Consignment exports are without
firm export order and at the risk of the exporter for sale abroad and eventual remittance of
sale proceeds by the exporters agent/ consignee.
Advances against Duty Draw-back receivable by the exporter from the Government:
Government provides export incentives in the form of refund of excise and custom duties
(duty draw-back) with a view to neutralize the disparities in the domestic cost of production
vis--vis the competitor countries. Advances may be granted by banks at post-shipment stage
to the exporters against duty draw-back entitlements for a period up to 90 days at
concessionary interest rates, pending final sanction and payment thereof to the exporters.
Advances against approved deemed exports: Banks may extend Rupee pre-shipment and
post-supply Rupee export credit at concessionary interest rate to parties against orders for
supplies in respect of projects financed/ aided by bilateral and multi-lateral agencies, like
World Bank, International Development Agency (IDA). These advances are adjusted from
free foreign exchange representing payments for supplies of goods to these agencies by the
parties concerned.

7.5.4. Other export Finance Methods:

Exports can also be financed by Export Factoring, and Forfaiting. These topics have been discussed
in Unit 5. Export leasing can also be a mode of making available equipments by Indian companies
on lease to foreign users (vide topic of Leasing in Unit 4). However, these financing methods are
seldom used and are yet to develop in India.

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7.6. LET US SUM UP:

7.6.1. Cross-border finance is assuming greater importance in India, and also in several developing
economies, due to the increasing degree of globalization and liberalization taking place in these
economies. The developing country like India also needs external financial resources to supplement its
domestic savings for achieving the needed investment for faster economic growth.
7.6.2. The main sources of external finance are :
External Commercial Borrowings, including Syndicated foreign currency loans.
Direct Foreign Investment
Non-resident deposits via FCNR and NRE accounts
Global/ American/International Depository Receipts (by the individual companies).
7.6.3. Indian imports and exports and their financing are governed by several regulatory requirements,
which must be strictly followed by the exporters/ importers as well as the financing banks. The
regulations are issued by the Trade control/ Exchange control/ Banking regulators in the country within
the overall national policy framework issued by the Commerce and Finance ministries of the Union
Government. External Commercial Borrowings and Direct Foreign Investment guidelines are also issued
by the Finance ministry.
7.6.4. In order to encourage exports, RBI provide concessionary interest on pre-shipment and postshipment finance extended by Authorised Dealers. RBI have specified eligibility criteria and terms of
finance to guard against misuse and diversion of such finance by the borrowers for non-approved
purposes. Rigourous reporting requirements by the Authorised Dealers are also prescribed by RBI in
their AD series of circulars.
7.7. CHECK YOUR PROGRESS:
A) Expand the following acronyms:
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
xi)
xii)
xiii)

WTO
ECB
LIBOR
OGL
GDR
FCNR
NRE
PIO
AD
DFI
UCPDC
FEDAI
ECGC

88
B) Match each term in column I with the appropriate term in column II so as to form meaningful pair of
terms:
Column I
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)

Column II

NR accounts
NRE accounts
FCNR accounts
Foreign Direct Investment
Cash exports
Pre-shipment Finance
ECB
Forfaiting
International Leasing
Import LC

Confirming bank
Tax shield
Without recourse finance
PIOs
Indian Rupees
Infrastructure projects
Working Capital Finance
180 days
FIPB
Convertible Currency

C) Fill up the blanks in the following sentences by appropriate words:

i) NRE accounts can
----------by-------------- .

be

opened

by

banks

which

are

designated

as

----------

ii) FCNR accounts are opened in specified ------------ currencies in the form of -------------------------.
iii)
Interest earned on NRE accounts is ---------------- in India.
iv)
Loans -------- be granted by banks in India against the security of NRE accounts.
v)
ADRs are issued as per security regulations of -------------- where these securities would be
listed.
vi)
Each exporter and importer who wants to avail bank finance must have --------number.
vii)
---------------Credit is a form of pre-shipment finance.
viii) Post-shipment Finance is used for liquidating the relative ---------------- Finance.
D) Please state whether the following statements are True or False:
i)
ii)
iii)
iv)
v)
vi)
vii)

Indias exports in FY 2003-04 were in the region of USD 100 billion.

The Foreign Trade Policy announced by Government of India in late august 2004 related to
period 2004-05.
Government of India allows FDI inflow for meeting its budgetary deficits.
ECB policy is framed and announced by RBI.
FRNs refer to Fixed Rate Notes.
IDRs are issued in India as per securities regulations in India.
GDRs are issued in Germany as per securities regulations in Germany.

89
viii)
ix)
x)

Packing credit is granted only for packing of exportable goods, but not for other working
capital requirements.
Pre-shipment at concessionary rate can be granted to a SSI unit for over 360 days.
Deferred term export finance exceeds 180 days.

7.8.TERMINAL QUESTIONS:
i)
ii)
iii)
iv)
v)
vi)

Distinguish between FDI and ECB as sources of external finance. Which route you prefer for
financing Indias economic development for the next 5 years and why?
Explain the unique risks associated with cross-border financing..
What are the various kind of LCs. Describe their main features.
Why LCs issued by some banks are required to be confirmed by another bank?
Distinguish between Pre-shipment and post-shipment finance.
What are the main regulatory requirements governing international trade finance in India.

7.9.ANSWERS TO CHECK YOUR PROGRESS:

A)
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)
xi)
xii)
xiii)

World Trade Organisation

External Commercial Borrowings
London Inter-Bank Offered Rate
Open General Licence
Global Depository Receipts
Foreign Currency Non-Resident
Non-Resident External
Persons of Indian Origin
Authorised Dealer
Direct Foreign Investment
Uniform Customs and Practices in Documentary Credit.
Foreign Exchange Dealers Association of India
Export credit and Guarantee Corporation of India.

i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
ix)
x)

NR accounts
NRE accounts
FCNR accounts
Foreign Direct Investt.
Cash Exports
Pre-shipment Finance
ECB
Forfaiting
International Leasing
Import LC

B)
PIOs
Indian Rupees
Convertible Currency
FIPB
180 days
Working Capital Finance
Infrastructure projects
Without recourse finance
Tax shield
Confirming Bank

90

C)
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)

Authorised Dealers
RBI
Foreign
Term Deposits
Non taxable
Can
USA
Importer-Exporter Code
Packing
Pre-shipment Finance

D)
Statements at (i) to(ix) are False and at (x) is True.
End of Unit 7